Getting Started in Real Estate Investing

Even though the housing market has shown some variability over the last 7 or 8 years, there’s truth to the notion that, over time, real estate tends be an extremely lucrative venture. However, for the newbie investor who may be slightly intimidated by the complex market, it’s worthwhile to get the ball rolling so the quest for profit can be realized.

First off, FIND A PROPERTY. While this aspect may seem like the easy part of the process, it’s important to remember that the goal is to find someplace that will meet your needs, as well as the needs of your investment profile. Now, if I’ve left you scratching your head a bit, you can build the framework of your profile by setting a few simple boundaries:

1. Properties must be within __ miles of where I live or work.

2. The down payment must be ___ or less.

3. I want properties with monthly payments (including taxes, fees, mortgage payments, etc.) that don’t exceed ______.

4. I want to focus on single family homes/condos/duplexes, etc.

5. I want to eventually rent/sell the property.

6. If I have to, I can cover the monthly expenses for ____ months without selling or finding renters.

7. I can personally take care of these home maintenance tasks: _______, _______, and _______.

Once you can begin to answer these types of questions, you’ll be in a better position to search for the right property. In addition, it will also prepare you to partner with an experienced real estate agent who can help you narrow your results based upon the above criteria.

The next key step is to FIND FINANCING. Unless your situation will allow you to pay cash, financing is simply about securing leverage that will put you in a position to control large properties with relatively small amounts of your own money. However, while procuring a loan is a vital aspect of buying a home, it’s still important to remember that loans are borrowed money. Sure, your ability to make a profit will increase, but your risk will increase as well.

With this, you will still need to be prepared to put up a DOWN PAYMENT, which in today’s market, tends to sit between 20-25% for conventional financing. However, there are still an assortment of special programs available that can lower any upfront costs, so it’s wise to seek the advice of your Realtor. If anything, they can refer you to a reputable bank or mortgage broker who may be in a better position to further this aspect of the buying process.

Once you’ve researched possible loan sources and settled upon the one that best meets your needs, PRE-APPROVAL is the next important step because it will show a seller that you’re a) serious about buying, and b) capable of making the closing process happen.

However, even with pre-approval, it’s important to note that the above steps are simply about creating conditions which make real estate success possible. Unless you’re able to purchase an affordable property that is within your circle of competence and can be maintained under the umbrella of a suitable loan, you’ll find yourself in an extremely difficult position that may eat away at your profit margin.

Therefore, if you’re thinking seriously about real estate investment, it’s important to remember that a large determinant of your success is based upon your ability to stick to a budget and to surround yourself with competent industry professionals who will help steer you in the right direction.

If you’d like some assistance, I would be more than happy to help lay some groundwork. Please contact me at your earliest convenience.

Pam Evans | Hello Pam Evans Real Estate | www.HelloPamEvans.com | 678-778-6551